Gold Heads for Biggest Gain in 3 Weeks on U.S. GDP Data

Five and ten gram platinum bars are arranged for a photograph at the Istanbul Gold Refinery in Istanbul, Turkey. Photographer: Kerem Uzel/Bloomberg

Jan. 30 (Bloomberg) -- Gold capped the biggest gain in
almost three weeks after a report showed the U.S. economy
unexpectedly shrank in the fourth quarter, boosting demand for
the metal as a haven. Silver jumped the most since September.

Gross domestic product, the volume of all goods and
services produced, dropped at a 0.1 percent annual rate, weaker
than any forecast in a Bloomberg survey and the worst
performance since the second quarter of 2009, government figures
showed today. Policy makers will keep buying securities at the
rate of $85 billion a month, the Federal Open Market Committee
said today at the conclusion of a two-day meeting after the
close of New York floor trading for gold.

“Clearly with the negative GDP, we’re seeing a flight to
safety,” Tim Evans, the chief market strategist at Long Leaf
Trading Group in Chicago, said in a telephone interview.
“Growth has been fairly stable in recent quarters, but if we
see more numbers like this, gold is going to have a good run.”

Gold futures for April delivery climbed 1.1 percent to
settle at $1,681.60 an ounce at 2:01 p.m. on the Comex in New
York, the biggest gain for a most-active contract since Jan. 10.
Prices rose as much as 1.3 percent in electronic trading after
the Fed’s announcement.

Silver futures for March delivery climbed 3.2 percent to
$32.177 an ounce in New York, the biggest gain since Sept. 13.

Sales of American Eagle silver coins by the U.S. Mint
jumped to a record this month on increased demand for an
alternative to currencies as the U.S. central bank presses on
with unprecedented stimulus. Sales surged to 7.42 million ounces
so far in January, the biggest monthly total since 1986, when
the Washington-based Mint began the transactions, Michael White,
a spokesman, said in a telephone interview yesterday.

On the New York Mercantile Exchange, palladium futures for
March delivery gained 0.2 percent to $751.40 an ounce. Earlier,
the metal reached $760.50, the highest since Sept. 9, 2011.

Platinum futures for April delivery rose 0.6 percent to
$1,689.30 an ounce on the Nymex.